This is sponsored content submitted by Sun Life Financial.

Canadians are generally optimistic about their finances — even as they hold negative views on the domestic economy. Nearly 70% report a neutral or negative view of the economy over the next 5 years. But how does this stack up with what’s in their portfolios? The first edition of Sun Life Global Investments’ Investor Sentiment Report reveals a continuing tendency toward home-country bias and a conservative approach to investing.

Cautious Canadians

Conservative approach could cloud retirement plans

We asked investors to share how their portfolios, including personal savings and employer-sponsored retirement plans, are constructed. About one-quarter of respondents could not tell us how their assets are invested. But among those that could, we learned there’s a significant amount of cash sitting on the sidelines. Canadians are holding, on average, 25% of their portfolio in cash. The rest includes:

  • 34% Canadian stocks and stock mutual funds
  • 13% Canadian bonds and bond mutual funds
  • 12% foreign stocks, bonds and mutual funds
  • 5% exchange traded funds
  • 11% other

High cash reserves are adding basically nothing to client investment accounts with interest rates nearing record lows. Now could be an ideal time to revisit why clients may be leaving cash un-invested.

We also asked investors if they plan to invest more in foreign assets in the next 12 months. Just 16% said yes, almost 60% said no and 26% either didn’t know or weren’t sure. Of those who do not plan to add foreign investments, 39% said it’s because they prefer their investments to be in Canadian dollars and 32% said the global economy is weak.

Putting portfolios in perspective

It may help to point investors to the largest investment portfolio in the country. The Canada Pension Plan (CPP) Investment Board holds just 7.3% of its assets in Canadian equities and 42% in foreign equities as of March 31, 2015. The take-away for clients? The CPP’s investment portfolio holds 5 times more foreign developed market and emerging market equities than it does Canadian equities. Similarly, the professionally managed Sun Life Granite Managed Portfolios provide investors with diversification outside of Canada and exposure to unique asset classes such as real estate and infrastructure. When it comes to market volatility, 38% admitted to checking their portfolio more frequently during periods of uncertainty. There’s an opportunity for you to continue the conversation with clients about their retirement plans. Consider posing some questions to help you dig deeper:

  • What worries you about your investments? Fluctuating returns, a savings shortfall or something else?
  • What are your thoughts about investing in foreign stock markets?
  • Have you ever looked at how the CPP invests its money?

Insights from the Investor Sentiment Report aim to reveal the ever-evolving needs of Canadians to help you better serve clients. Keeping clients engaged in the process can make a world of difference with their investment knowledge. With your guidance, clients can feel confident their money is working for them to help achieve their retirement goals.


About the report

The Investor Sentiment Report by Sun Life Global Investments is based on the findings of an Ipsos Reid poll conducted between July 20 and August 8, 2015. A sample of 1,502 Canadians from 25 to 80 years of age from the Ipsos Canadian panel was interviewed online.

Ipsos employed weighting to balance demographics and ensure that the sample composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The data is also weighted to reflect total household investment assets by the age of the major income earner based on a special tabulation from the Statistics Canada Survey of Financial Security, 2012.

The precision of Ipsos online surveys is measured using a credibility interval. In this case, the survey is accurate to within + 2.9% 19 times in 20 had all Canadian adults been polled. All sample surveys and polls may be subject to other sources of error, including, but not limited to methodological change, coverage error and measurement error.

Rick Headrick is President of Sun Life Global Investments (Canada) Inc. In this role, Mr. Headrick has overall responsibility for the development, management and growth of the investment company. Mr. Headrick works with investment colleagues across Canada, the United States and Asia to encourage investment product development and facilitate the sharing of knowledge across Sun Life Financial’s investment management community.

Mr. Headrick joined Sun Life in 2004 and has held several senior leadership roles across the company’s wealth platform. He holds a Bachelor of Commerce and LL.B. from the University of Saskatchewan and was called to the Ontario Bar in 1994. He also holds a Certified Financial Planner (CFP) designation.
Originally published on Advisor.ca